That's right. I tried doing Ctrl+Alt+F1. When I do this I see a pure command line environment without any windowing system. So is this what you refer to as a "console terminal"?
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ParagMar 31 '10 at 11:50

It is an xterm. Or close enough to be one. From the article, "GNOME Terminal is similar to the xterm terminal emulator, and has a nearly identical feature set." You can tell it's GNOME Terminal because of the result of a "ps axf" from the terminal.

Rereading your question, the 7 terminals you may be referring to are console terminals, which another poster pointed out. They aren't xterms really because they're not running under X. Xterms are terminal emulators that run under X Windows.

To understand terminals you would need to dig through computer history to the time when people interacted with timesharing systems with...wait for it...terminals. As UNIX and other OS's of the time evolved, they just kind of adopted the whole terminal emulator thing as a way to be compatible with what was on the market.

Most Linux systems have a default number of terminal sessions running, listening for connections, in the background (through alt+Fx), and today with X being a default interface you have to hit control-alt-Fx to first get to a terminal, then change among them with alt+Fx until you get to the controlling terminal for your X session.

So, yes, Terminal in Ubuntu is an xterm/terminal emulator and you can have as many as you want running within limitations of system resources, but Linux usually (and this is configurable, big surprise) has several console session terminals in the background in case you wanted a pure command-line interaction.